Posted by Susan Fischer on 7/29/07 10:28pm
Msg #202639

Tossing out a couple of questions:

Question # !:

Can a Notary Signing Agent collect funds (in this case, $3600) from a borrower, where there is neither 'cash/check' due from borrower on the HUD-1, nor that amount evidenced on any document in the packet, but where the "Loan Officer" alone is demanding the funds?

This question arises in the wake of a contentious signing that the borrower untimately refused to complete. [During the signing, the borrower was in lengthy contact with the LO, who could not convince her to accept this deal. The LO had directed the borrower to have the cashier's checks (the first for $3200 and an additional check for $400) made out to the Title Company (Settlement Agent).]


Question # 2:

Under what circumstances is the amount in the "Amount Financed" box of the Truth in Lending form lower than the "Principal" on the Note, and the "Amount Borrowed" on the HUD-1? Does it have to do with ARMs?

(For my own edification and not related to the prior question.)

Thanks in advance for your input.

Susie

Reply by Larry/Ca on 7/30/07 2:49am
Msg #202643

Susan,
We do not 'collect funds' any more than the FedEx guy 'delivers' funds. People who 'collect funds' give receipts. We are simply including the borrowers check with the documents as requested. I don't know why you would have a problem including a check or anything else the borrowers wanted to send with the documents.

As for the 'Amount Financed' on the TIL, this is always less than the amount on the Note by the amount of the settlement charges. On a true 'no cost' loan these amounts ought to be the same.

Reply by Susan Fischer on 7/30/07 12:14pm
Msg #202720

Thanks, Larry.

I guess my problem was empathetic. I was not told to 'include' her checks with the return package, she was told to send them by the loan guy, and he was unable to convince her that these "extra" monies were due. In any event, of her own accord, she rejected the loan product submitted to her.

I was just wondering if there was a legal question here - and it looks like there isn't.

As for the second item, I'm seeing that there are some 'prepaid' charges that are exempt from inclusion in the APR, and some that are not, and that different lenders use different formulae. What fun.

Thanks again.

Reply by PAW on 7/30/07 8:03am
Msg #202653

#1 - As long as the checks are made out to the Settlement company, and no one else, then there should be no problem, even if the amount is not reflected on the HUD. The reason for this additional amount could be for things like, pre-payment of an installment loan, on a commercial loan that wouldn't appear on the borrowers credit report or payout schedule; prepayment of 'x' number of months against the new loan because the borrower didn't have funds in the bank (liquid asset) to cover 3, 6 or possibly 12 months of payments. Of course, there may be other reasons too.

#2 - The "Amount Financed" should always be less than or equal to the "Amount Borrowed". Often there will be an "Itemization of Amount Financed" disclosure that shows the original loan amount minus the "pre-paid finance charges" (as shown on the HUD), leaving the amount to be financed. That is what the Finance Charge is subsequently based on. Many lenders include a sheet along with the TIL that explains the boxes. (Note: The pre-paid finances charges are a small part of the total settlement charge or fee.)